The long-awaited tech correction is here

Everybody’s been talking about the tech bubble for the last few years.

But in 2015 the talk peaked, as private company valuations grew to the point where Facebook’s $1 billion acquisition of 13-person company Instagram in 2012 now looks cheap, and privately held Uber with no published financial returns and massive losses is supposedly worth more than Ford and GM.

On the other side, you have folks like VC Marc Andreessen, who has mostly insisted that we’re not in a tech bubble, but acknowledged that some private companies were set to vaporise if they didn’t control their burn before the market turned.

Tableau, a hot “big data” company that went public in 2013, lost half of its value Friday after a disappointing earnings report featured slowing growth and lower-than-expected guidance — even though it beat on earnings.

LinkedIn, the social network for professional connections, lost 44% of its value on Friday after similarly disappointing guidance, erasing $10 billion in value.

Investor Mark Suster gave an alarming presentation where he showed that contributions from limited partners — the big investors who give their money to VCs to invest in startups — are back to pre-recession levels. Nearly all VCs expect company valuations to drop, and one-third expect “significant” price corrections.

Many of the bigger, older tech companies aren’t faring much better. Amazon missed earnings and the stock is down a whopping 26% since it reported earnings on January 28. Apple’s iPhone growth has stalled out and the company’s stock is down 6% after its earnings report last week, and down 11% year to date. Microsoft won on earnings, and its shares popped more than 5% … and then sank right back down on fears of lessening margins on its cloud business.

Today is the day Unicorn CEOs begin to learn what a PE ratio is. And the cold reality that a 30-40 PE is a high valuation.
— Bill Gurley (@bgurley) February 5, 2016

For those of you who don’t know, a P/E ratio is a price-to-earnings ratio, which measures the value of a company versus its last-four-quarters’ income. Apple’s P/E ratio is now less than 10. A company like Uber has a P/E ratio that’s impossible to express because its earnings are less than zero.

A bunch of startups who accepted unfavorable terms when they raised their last rounds could find investors forcing them to liquidate or sell on terms that help investors recover some of their money, but leave founders and employees with nothing.

Startups that are burning too much cash could quickly disappear as funds will be harder to raise.

A wave of acqui-hires as cash-rich giants scoop up talent by raiding struggling startups.

Lower salaries and fewer perks as startups and big tech companies alike strain to show investors that they’re being responsible during these lean times.